SEPARATION AGREEMENT
This Agreement ("Separation Agreement") is dated as of November 8,
2002, and is between Xxxxx Xxxxxxxx, an individual residing at 0 Xxxx Xxxxx,
Xxxxx Xxxxxx, Xxx Xxxx 00000 ("Executive"), and Twin Laboratories Inc.
("Company"), a Utah corporation with its principal place of business at 000
Xxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
1. Retirement. Executive and Company are parties to an employment
agreement, dated as of January 1, 2001, attached hereto as Exhibit "A" (the
"Employment Agreement"). Capitalized terms used herein shall have the meaning
set forth in the Employment Agreement. Executive and Company agree that the
Executive has retired from the Company, effective as of the date of this
Separation Agreement (the "Retirement Date"). Except as otherwise set forth
herein, the Executive's employment, and the Employment Agreement, are terminated
as of the Retirement Date, provided, however, that Executive and Company agree
that the provisions set forth in Sections 3(d), 5, 6, 7, 10(b) and 10(k) of the
Employment Agreement, as amended herein, are valid, binding, continuing and
enforceable and shall survive the termination of the Employment Agreement.
2. Non-Competition; Non-Solicitation. Notwithstanding anything to
the contrary set forth in this Separation Agreement or the Employment Agreement,
as amended herein, the parties agree that the period during which Executive must
observe the non-competition provisions set forth in Section 5 of the Employment
Agreement and the non-solicitation provisions set forth in Section 6 of the
Employment Agreement (the "Non-Compete Period") shall be for the three-year
period ending November 8, 2005. Provided Executive is not in breach of this
Separation Agreement, or the surviving provisions of the Employment Agreement,
as amended herein, the Non-Compete Period shall expire at the time that the
Company fails to make any payments of the Base Salary the Company is legally
obligated to make under this Separation Agreement.
3. Severance. Provided Executive is not in breach of this Separation
Agreement, or the surviving provisions of the Employment Agreement, as amended
herein, Section 5 of the Employment Agreement is amended so that Company shall
make payments to Executive of (a) the Base Salary through the end of the
Non-Compete Period (the "Severance Period"), paid in accordance with the normal
payroll practices of the Company and (b) all unreimbursed business expenses
incurred by Executive which have been submitted to the Company (and set forth on
Exhibit B attached hereto) but not paid as of the Retirement Date, paid as soon
as practicable after the Retirement Date. If Executive dies, all amounts payable
to Executive under this Section 3 shall be paid to Executive's devisee, legatee,
or other designee or, if there is no such designee, to designee's estate.
Benefits. Executive shall be entitled to all benefits accrued up to the
Retirement Date under all employee benefit plans of the Company, in accordance
with the terms of such plans. In addition, during the Severance Period, provided
Executive is not in breach of
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this Separation Agreement, or the surviving provisions of the Employment
Agreement, as amended herein, the Company shall (a) arrange for Executive to
participate in and receive the Company's medical, dental, prescription drug,
insurance plans as in effect from time to time during the Severance Period on
the same terms and conditions as are provided to general employees of the
Company, provided that the medical coverage extended hereunder shall not include
the Executive Medical Plan and (b) shall reimburse Executive for the premiums
paid by Executive in respect of Executive's Universal Life Insurance Policy
(Policy No. ___) in the face amount of $250,000.
4. Executive agrees, except as expressly set forth herein, to
surrender and forego, as of the date of this Separation Agreement, any and all
of his right to any benefits under paragraph 3(c) of the Employment Agreement,
including any car allowance. Executive and members of his immediate family shall
be provided with Company products in quantities and at times as they shall
reasonably request.
5. No Further Liability; Mutual Release. This Separation Agreement
shall operate to fully discharge and release the Executive, his devisees,
legatees, or other designees or his estate and the Company, its directors,
officers, employees, subsidiaries, affiliates, stockholders, successors,
assigns, agents and representatives from any further obligation or liability to
the other (other than any obligations the Company may have pursuant to Company's
Stock Incentive and Stock Option Plans) with respect to, in connection with or
arising out of Executive's employment or the termination of Executive's
employment except for the obligations set forth in this Separation Agreement or
the surviving provisions of the Employment Agreement, as amended herein. The
Executive and the Company each expressly waive any and all rights to pursue any
remedy at law or in equity related to the Executive's employment or the
termination thereof. Contemporaneously with the execution and delivery of this
Separation Agreement, the Executive and the Company are executing releases in
the forms of Exhibits C and D hereto, respectively.
6. In the event that Executive shall materially breach any of the
provisions of this Separation Agreement, in addition to any other remedies the
Company may have, the Company shall have the right to cease all benefits granted
hereunder and in the surviving provisions of the Employment Agreement, as
amended herein.
7. Continuing Obligations. Executive agrees that he will comply with
the requirements of Sections 10(b) and 10(k) of the Employment Agreement.
8. Announcements; Confidentiality.
(a) The press release with respect to the retirement of
Executive is attached as Appendix E to this Separation Agreement. The Company
agrees to consult with Executive prior to issuing any public statement with
respect to his retirement.
(b) Executive agrees that he will not, without the prior
written consent of the Company, disclose to any person or entity any of the
terms, conditions or
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other facts with respect to this Separation Agreement, except for disclosure (i)
to his legal and financial advisors and immediate family members, (ii) if
required by order of a court or other body having jurisdiction over such matter,
and (iii) with the written consent of the Company.
9. Remedies for Breach. The parties hereto agree that Executive is
obligated under this Separation Agreement to render obligations of a special,
unique, unusual and extraordinary character, thereby giving this Separation
Agreement special and extraordinary value, and, in the event of a breach or
threatened breach of any provision of this Separation Agreement by Executive,
the injury or imminent injury to the value and the goodwill of the Company's
business could not be reasonably or adequately compensated by damages in an
action at law. Executive expressly acknowledges that the Company shall be
entitled to specific performance, injunctive relief and any other applicable
equitable remedy against Executive without the posting of a bond in the event of
any breach or threatened breach of any provision of this Separation Agreement by
Executive. Without limiting the generality of the foregoing, if Executive
breaches or threatens to breach any of the provisions of Sections 5, 6, or 7 of
the Employment Agreement, as amended herein, or Sections 8 or 9 of this
Separation Agreement, such breach or threatened breach will entitle the Company
to enjoin Executive from engaging in any activities prohibited by such
provisions. This provision shall not be construed as a waiver of any of the
rights that the Company may have for damages under this Separation Agreement or
otherwise.
10. Reasonableness of Restrictions. Executive agrees and
acknowledges that:
(a) the provisions of Sections 5, 6 and 7 of the Employment
Agreement, as amended herein, may limit his ability to earn a livelihood in a
business similar to the business of the Company but nevertheless agrees that
such provisions are reasonable and necessary for the protection of the Company
and do not impose a greater restraint than is necessary to protect the goodwill
or other business interest of the Company;
(b) such provisions contain reasonable limitations as to the
time and the scope of activity to be restrained; and
(c) the consideration provided under this Separation Agreement
is sufficient to compensate Executive for the restrictions imposed in Sections
5, 6, and 7 of the Employment Agreement, as amended herein. In consideration of
the foregoing and in light of Executive's education, skills and abilities,
Executive agrees that any defenses by Executive to the strict enforcement of
such provision are hereby waived by Executive and Executive agrees that he will
not assert that such provisions are void, voidable or unenforceable.
11. Miscellaneous.
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(a) Personal Guaranty. The Company shall take no action which
has the direct or indirect effect of (i) reducing the amount of any personal
guarantee of Company debt (including any release or reduction of personal
liability in respect of a letter of credit benefiting the Company) by a member
of the Xxxxxxxx family, and/or (ii) otherwise making more favorable to any
guarantor the terms of any such guarantee, unless such reduction and/or change
of terms affects the guarantee of Company debt by Executive which is in effect
on the date hereof in a fashion no less favorable to him. Executive and his
spouse shall cooperate and shall take, or cause to be taken, all action
necessary in respect of that certain Reimbursement and Security Agreement No. 2,
dated as of April 9, 2001, by and among Twinlab Corporation, a Delaware
corporation, the Company, Advanced Research Press, Inc., a New York corporation,
Changes International, Inc., a Florida corporation, PR Nutrition, Inc., a
California corporation, Health Factors International, Inc., a Delaware
corporation, Xxxxxxx Laboratories, Inc., a Delaware corporation, on the one
hand, and Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxxxx and
Xxxxxx Xxxxxxxx, on the other hand, and any other document or instrument related
thereto, or entered into in connection therewith, including executing all
necessary or appropriate waivers, consents, approvals, releases of liens or
other documents, to enable the Company or any of its subsidiaries to transfer,
sell or otherwise dispose of any of its assets from time to time.
(b) Cooperation. Executive shall cooperate with the Company,
as may be reasonably requested by the Company, to effect a transition of
Executive's responsibilities and to ensure that the Company is aware of all
matters being handled by Executive and to be available during the Non-Compete
Period to assist the Company in connection with such transition without further
compensation, provided that such assistance does not significantly interfere
with other employment of Executive. In addition to his other obligations under
this Separation Agreement, during the first twelve (12) months of the
Non-Compete Period, Executive will be available as the Company may reasonably
require for depositions, testimony and other matters relating to litigation
involving the Company.
(c) Counterparts; Facsimile Transmissions. This Separation
Agreement may be executed in any number of counterparts, each of which when so
executed, then delivered or transmitted by telefax, shall be deemed to be an
original and all of which taken together shall constitute but one and the same
instrument.
(d) Severability. If any provision of this Separation
Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Separation Agreement will remain in
full force and effect. Any provision of this Separation Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
(e) Waivers and Amendments. This Separation Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by written instrument signed by the Company and the Executive. No
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delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
(f) Entire Agreement. Except as otherwise set forth herein,
this Separation Agreement (including certain provisions of the Employment
Agreement, as amended herein, and specified herein), constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.
(g) Successors and Assigns. This Separation Agreement is
binding upon the parties and each of their respective successors, heirs and
permitted assigns.
(h) No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for pursuant to this Separation
Agreement by seeking other employment and, to the extent that the Executive
obtains or undertakes other employment (including self-employment), no such
payment will be reduced by the earnings of the Executive from the other
employment.
(i) Costs and Expenses. The Company shall pay directly the
fees and expenses of Executive's counsel in the amount of up to $7,500 in
connection with the negotiation, execution, delivery and performance of this
Separation Agreement. If an action or proceeding is commenced by a party to
enforce or interpret any provision of this Separation Agreement, each party
shall pay its own costs and expenses of such action or proceeding, including
attorney's fees.
(j) Governing Law. This Agreement is governed by the laws of
the State of New York, without giving effect to principles of conflict of laws.
(k) Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement must be brought against any of the parties in the courts of the State
of New York, County of Suffolk, or, if it has or can acquire jurisdiction, in
the U.S. District Court for the Eastern District of New York, and each of the
parties consents to the jurisdiction of those courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any such action or proceeding may be served by
sending or delivering a copy of the process to the party to be served at the
address and in the manner provided for the giving of notices in Section 11(l).
Nothing in this Section 11(k), however, affects the right of any party to serve
legal process in any other manner permitted by law.
(l) Notices. Every notice or other communication required or
contemplated by this agreement must be in writing and sent by one of the
following methods:
(i) personal delivery, in which case delivery is deemed
to occur on the day of delivery;
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(ii) certified or registered mail, postage prepaid,
return receipt requested, in which case delivery is deemed to occur on the day
it is officially recorded by the U.S. Postal Service as delivered to the
intended recipient; or
(iii) next-day delivery to a U.S. address by recognized
overnight delivery service such as Federal Express or Airborne Express in which
case delivery is deemed to occur upon receipt. In each case, a notice or other
communication sent to a party must be directed to the address for that party set
forth below, or to another address designated by that party by written notice:
If to Executive to:
Xxxxx Xxxxxxxx
0 Xxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
If to Company to:
Twin Laboratories Inc.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attn.: Xxxx Xxxxxxxx, Chief Executive Officer
With a copy to:
Twin Laboratories Inc.
000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attn.: General Counsel
12. Assignment and Transfer; No Third Party Beneficiary.
(a) Company. This Agreement shall inure to the benefit of and
be enforceable by, and may be assigned by the Company to, any existing or future
subsidiary or affiliate of the Company (with a continuing guarantee of
performance by the Company), and shall be assigned to any purchaser of all or
substantially all of the Company's business or assets or any successor to the
Company (each, a "Successor"), whether direct or indirect, by purchase, merger,
consolidation, operation of law or otherwise. The Company will require any such
Successor by agreement in form and substance reasonably satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such purchase, merger, consolidation, succession or assignment had taken
place. Regardless of whether such agreement is executed, this Agreement shall be
binding upon any Successor of the Company in accordance with the operation of
law, and such Successor shall be deemed to be the Company for purposes of this
Agreement.
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(b) Executive. Executive's rights and obligations under this
Agreement shall not be transferable by Executive by assignment or otherwise, and
any purported assignment, transfer, alienation or delegation thereof shall be
void; provided, however, that if Executive shall die, (i) all amounts payable to
Executive under Section 3 of this Separation Agreement shall be paid in
accordance with the terms of this Agreement to Executive's devisee, legatee or
other designee or, if there be no such designee, to Executive's estate, and (ii)
all benefits provided to any beneficiary or dependent of Executive under Section
4 of this Separation Agreement shall continue to be provided to such person for
the remainder of the Severance Period, if any.
IN WITNESS THEREOF, the parties have executed this Agreement.
TWIN LABORATORIES INC. EXECUTIVE
By: ______________________ By: _____________________
Name: Xxxx Xxxxxxxx Name: Xxxxx Xxxxxxxx
Title: President and CEO
Date: ____________________ Date: ___________________
Agreed to and Accepted:
TWINLAB CORPORATION Accepted and Agreed to only as
to Section 11(a):
By:_____________________ By: _____________________
Xxxx Xxxxxxxx Name: Xxxxx Xxxxxxxx
President and CEO
Date: ___________________ Date: ___________________
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